Ivan Braiker, CEO of Hipcricket, commented, "For our fiscal third quarter, revenue was $6.4 million, which was below our forecast. During the quarter, new Telephone Consumer Protection Act (TCPA) consent rules became effective, which interrupted operations of many of Hipcricket's customers, beginning October 16, 2013. In particular, the volume of mobile marketing campaigns slowed as brands responded to the new regulations and focused on re-opting in subscribers to their SMS databases. Hipcricket marketing and advertising sales representatives were deployed into customer service roles to provide client support. This is not a major road block for our business, but it hurt the focus of our sales teams, which already included new hires and new sales leaders that are not yet fully productive. Our product and technology teams were also impacted, already contending with completing a data center move requiring significant product and tech support, which as a whole, resulted in the delay of new products being released. While the quarterly revenue was challenged, our end markets remained solid, and we achieved our highest Q3 bookings in Company history, up 51% over Q3 2012 to $8.4 million, a number we believe would have been better in the absence of the temporary and isolated issues that arose."

Mr. Braiker continued, "We expect the effects of the new regulation will lessen in the coming months as brands complete their rebuilding process. Product development is back on track: including our analytics product which has already been released in fiscal Q4. We have hired new sales leadership, replaced underperformers, and the tenure of our sales force is growing. We have met our internal goals surrounding the reduction in core operating expenses. We have rebranded the Company, launched our new website and increased our marketing resources and PR spend. Given the strength of our underlying platform and recent and upcoming product launches as well as the massive opportunities we see in the market, I believe that this is a major moment in the evolution of the company. We have done a great job building out our platform on the marketing side and a solid job in launching our advertising business. This company transformation has been our target for the last year, and it's finally here with our data and analytics products. Ultimately, I expect that these will help drive our growth as we sit at the center of two of the biggest trends: mobile and big data."

Third Quarter Highlights

Third quarter bookings (the dollar value of contracts signed during the quarter) were $8.4 million, the highest Q3 bookings in Company history.

Revenue for the third quarter of fiscal 2014 decreased to $6.4 million, from $7.4 million for third quarter of fiscal 2013, a decrease of 14%.

Operating expenses for the third quarter of fiscal 2014 were $8.4 million compared to $45.4 million in the third quarter of fiscal 2013. Non-GAAP operating expenses, defined as total operating expenses adjusted for non-cash charges for third quarter fiscal 2014 decreased to $6.2 million from $7.8 million for third quarter fiscal 2013.

Net loss for the third quarter of fiscal 2014 was $5.3 million, or $0.04 per share, compared to a net loss of $33.7 million, or $0.31 per share, for the third quarter of fiscal 2013. Excluding non-cash charges and benefits, the non-GAAP loss for third quarter fiscal 2014 was $3.1 million compared with $3.5 million for third quarter fiscal 2013.

As of November 30, 2013, backlog increased 28% to $20.8 million from $16.3 million compared to November 30, 2012.

Third quarter bookings (the dollar value of contracts signed during the third quarter) were $8.4 million, up 51% compared with the same period last year.

Cash and cash equivalents as of November 30, 2013 were $4.9 million with borrowings on our revolving credit facility of $1.4 million and an additional $3.2 million available under that facility.

This press release includes financial measures defined as non-GAAP financial measures by the SEC. The presentation of this financial information is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with generally accepted accounting principles accepted in the United States of America ("GAAP"). Generally, a non-GAAP financial measure is a numerical measure that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with GAAP. We supplement our GAAP disclosures with Non-GAAP Operating Expenses and Non-GAAP Earnings (Losses). These amounts exclude non-cash items, including share-based compensation expense, depreciation and amortization, acquisition related contingent consideration (including fair value adjustments and deferred income tax benefits), and impairment charges for goodwill and intangible assets and investments. The following table reconciles Non-GAAP Operating Expenses and Non-GAAP Earnings (Losses) to the comparable GAAP measures (Unaudited):

A telephone replay of the conference call will be available from 7:30 p.m. ET on January 7, 2014 until 11:59 p.m. ET on January 14, 2014 by calling 877-870-5176 (domestic) or 858-384-5517 (international) and entering confirmation #4658901. An archived replay of the conference call will also be available in the corporate section of the company's website.

About Hipcricket, Inc.Hipcricket, Inc. (OTCBB: HIPP) & (OTCQB: HIPP) provides a unified mobile engagement platform that drives awareness, sales and loyalty. The AD LIFE® platform has been used by internationally recognized brands and agencies to power over 250,000 campaigns across SMS, 2D/QR codes, mobile websites, advertising networks, social media and branded apps. Hipcricket, Inc. is headquartered in Bellevue, Wash. For additional Hipcricket news and information, please visit www.hipcricket.com or text "NEWS" to 24474.

This press release contains forward-looking statements regarding future events and our future financial performance. All statements other than present and historical facts contained in this release, including any statements regarding our plans for future operations, anticipated future financial position, anticipated results of operations, financing plans, business strategy, competitive position, opportunities for growth and industry trends, are forward-looking statements. All forward-looking statements involve risks, uncertainties and contingencies, many of which are beyond our control. Our actual results, performance, or achievements may differ materially from those projected or assumed in any of the forward-looking statements. Factors that could cause actual results to differ materially from the forward-looking statements include, among others: overall economic and business conditions; the demand for our products and services; competitive factors in our industry; the emergence of new technologies; our cash position; the availability of funding sources; the strength of our intellectual property portfolio; and changes in government regulations in our industry. A more detailed discussion of these factors is set forth in our annual report on Form 10-K for the year ended February 28, 2013 and other reports filed with the U.S. Securities and Exchange Commission. The Company does not intend, and undertakes no duty, to update any forward-looking statement to reflect future events or circumstances.

Consolidated Balance Sheets

(in thousands)

November 30, 2013

February 28, 2013

(Unaudited)

ASSETS

CURRENT ASSETS

Cash & cash equivalents

4,856

4,353

Restricted Cash

214

214

Accounts receivable, net

6,432

5,707

Prepaid expenses and other current assets

484

772

Total current assets

11,986

11,046

Intangible assets held for sale

-

3,500

Property and equipment, net

162

83

Goodwill

35,060

35,060

Intangible assets, net

25,479

25,812

Deposits

261

238

TOTAL ASSETS

72,948

75,739

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES

Accounts payable

4,042

4,812

Accrued liabilities

2,569

2,614

Deferred revenues

573

852

Line of credit

1,357

-

Total Current liabilities

8,541

8,278

LONG TERM LIABILITIES

Deferred income tax liability

3,518

3,518

Accrued liabilities

30

82

TOTAL LIABILITIES

12,089

11,878

Commitments and contingencies

STOCKHOLDERS' EQUITY

Common stock

15

13

Additional paid in capital

186,906

175,242

Accumulated deficit

(126,062

)

(111,394

)

Total stockholder's equity

60,859

63,861

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

72,948

75,739

Consolidated Statements of Operations

Unaudited

(in thousands except Net Loss Per Share and Shares Outstanding)

3 months ended

9 months ended

November 30, 2013

November 30, 2013

2013

2012

2013

2012

REVENUE

6,426

7,433

19,884

18,701

COST OF REVENUES

3,242

3,054

9,226

7,464

OPERATING EXPENSES

Sales and Marketing

2,744

3,815

8,906

11,319

Technology and Development

1,603

1,927

4,962

5,937

General and Administrative

2,355

3,458

7,131

10,441

Depreciation and Amortization

1,276

1,597

3,829

4,681

Goodwill impairment

-

25,919

-

25,919

Impairment of intangible assets and investments

465

8,668

465

8,668

Total operating expenses

8,443

45,384

25,293

66,966

LOSS FROM OPERATIONS

(5,259

)

(41,005

)

(14,635

)

(55,729

)

OTHER INCOME (EXPENSE)

Interest income (expense), net

(19

)

(40

)

(34

)

(37

)

Acquisition related contingent consideration

-

7,339

-

12,200

NET LOSS BEFORE INCOME TAXES

(5,278

)

(33,706

)

(14,669

)

(43,567

)

Income tax benefit

-

-

-

2,619

NET LOSS

(5,278

)

(33,706

)

(14,669

)

(40,948

)

BASIC AND DILUTED NET LOSS PER SHARE

$

(0.04

)

$

(0.31

)

$

(0.11

)

$

(0.41

)

WEIGHTED AVERAGE SHARES OUTSTANDING

145,698,039

108,460,588

135,114,413

99,718,225

Consolidated Statements of Cash Flows

Unaudited

(in thousands)

3 months ended

9 months ended

November 30, 2013

November 30, 2013

2013

2012

2013

2012

CASH FLOWS FROM OPERATING ACTIVITIES

Net loss

(5,279

)

(33,706

)

(14,669

)

(40,948

)

Adjustments to reconcile net loss to net cash used in operating activities: